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The Coca-Cola Company (KO - Free Report) has reported third-quarter 2024 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. The company’s earnings per share (EPS) rose year over year while sales declined. The results benefited from continued business momentum, aided by improved pricing across markets. Following the results, KO has revised its view for 2024 and provided its outlook for 2025.
Coca-Cola has reported comparable EPS of 77 cents in the third quarter, up 5% from the year-ago period. Comparable EPS also beat the Zacks Consensus Estimate of 74 cents. Unfavorable currency translations hurt the comparable EPS by 9 percentage points. Comparable currency-neutral earnings per share rose 13% year over year.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenues of $11.85 billion declined 1% year over year but surpassed the Zacks Consensus Estimate of $11.61 billion. Organic revenues rose 9% from the prior-year quarter. Coca-Cola’s top line was hurt by declines across most of its operating segments. An improved price/mix in the quarter was offset by lower concentrate sales and adverse currency rates. In the reported quarter, Coca-Cola gained a global value share in the total number of non-alcoholic ready-to-drink beverages, led by Romania, France and South Africa.
The Zacks Rank #3 (Hold) stock has risen 5.5% in the past three months compared with the industry’s growth of 4.8%.
Image Source: Zacks Investment Research
Detailed Picture of KO’s Q3 Volume & Pricing
In the reported quarter, concentrate sales moved down 2% year over year, whereas the price/mix improved 10%. The price/mix benefited from higher pricing in the markets facing intense inflation, which contributed 4 points to the improvement. Also, pricing actions across the marketplace and a favorable mix contributed to the rest of the increase. In the quarter, concentrate sales were one point behind unit case volume, mainly driven by the timing of concentrate shipments.
Coca-Cola’s total unit case volume fell 1% year over year in the third quarter, driven by declines in China, Mexico and Türkiye.
Our model had predicted year-over-year organic revenue growth of 5.7% for the third quarter, with a 5.1% gain from the price/mix and a 0.6% increase in the concentrate sales volume.
CocaCola Company (The) Price, Consensus and EPS Surprise
Coming to the cluster-category performance, the unit case volume was flat year over year for sparkling soft drinks and trademark Coca-Cola. These categories benefited from growth in Latin America, North America and the Asia Pacific, offset by a decline in Europe, Middle East and Africa (EMEA). Coca-Cola Zero Sugar advanced 10%, aided by growth in all geographic operating segments. Meanwhile, the sparkling flavors category fell 1% year over year, owing to declines in EMEA and Latin America, offset by growth in North America and the Asia Pacific.
Volumes for juice, value-added dairy and plant-based beverages dipped 3% in the third quarter, led by declines in Minute Maid Pulpy in the Asia Pacific and Mazoe in Africa. This was partly negated by growth in fairlife in the United States.
Unit volumes for the water, sports, coffee and tea category dropped 4% year over year in the third quarter. Coca-Cola witnessed a 6% volume slip in the water category, led by declines across all operating segments. Sports drinks fell 3%, as gains in EMEA were more than offset by declines across other geographic segments. The coffee business dipped 6% due to a soft Costa coffee performance in the U.K. The tea volume rose 7%, backed by growth in the Asia Pacific, Latin America and EMEA.
Peak Into KO’s Segmental Details
Revenues rose 11% year over year for Latin America, 10% for North America and 1% for Global Ventures. However, revenues declined 1% for EMEA and 20% for Bottling Investments. Meanwhile, revenues remained flat year over year for the Asia Pacific segment.
Organic revenues improved 25% year over year in Latin America, 16% in EMEA, 10% each in North America and Bottling Investments, and 5% in the Asia Pacific. However, organic revenues were flat in Global Ventures.
Analyzing Coca-Cola’s Q3 Margins
In dollar terms, the operating income declined 23.2% year over year to $2.5 billion, including a 10-point impact of currency headwinds. Comparable operating income rose 3.8% year over year to $3.7 billion. Comparable currency-neutral operating income advanced 14% on strong organic revenue growth across all segments, offset by currency headwinds.
The operating margin of 21.2% in the third quarter contracted 619 basis points (bps) from 27.4% in the prior-year quarter. The comparable operating margin expanded 104 bps to 30.7%. The comparable currency-neutral operating margin expanded 274 bps to 32.4%.
Our model predicted the third-quarter adjusted operating margin to expand 60 bps year over year to 30.3%, driven by 210-bps growth in the gross margin, offset by a 160-bps increase in the SG&A expense rate.
KO’s Guidance for 2024
Management has updated its view for 2024. It anticipates organic revenue growth of 10% for 2024 compared with the 9-10% rise mentioned earlier. Comparable net revenues are expected to include a 5% currency headwind based on current rates and hedge positions. The guidance also includes a 4-5% negative impact of acquisitions, divestitures and structural changes. The company anticipates an underlying effective tax rate of 18.8% for 2024.
Comparable currency-neutral EPS for 2024 is expected to increase 14-15% year over year compared with the previously mentioned 13-15% rise. The company anticipates comparable EPS to grow 5-6% year over year for 2024.
Comparable EPS growth is expected to include currency headwinds of 9%, and impacts of 1-2% from acquisitions, divestitures and structural changes. The company expects most currency headwinds to result from currency devaluation due to intense inflation. Earlier, it expected currency headwinds of 8-9% to impact comparable EPS.
Management envisions an adjusted free cash flow of $9.2 billion for 2024, including $11.4 billion in cash flow from operations. Capital expenditure is likely to be $2.2 billion.
For fourth-quarter 2024, comparable revenues are expected to include a 4% currency headwind, and a 4-5% negative impact of acquisitions, divestitures and structural changes. Comparable EPS is estimated to include a 10% currency headwind, and a 3-5% negative impact of acquisitions, divestitures and structural changes.
Additionally, the company provided its initial view for 2025. It expects comparable net revenues to include a low-single-digit currency headwind based on the current rates and hedged positions. Meanwhile, comparable EPS is anticipated to include a mid-single-digit currency headwind for 2025.
Stocks to Consider
We have highlighted three better-ranked stocks from the Consumer Staple sector, namely Freshpet (FRPT - Free Report) , Vital Farms (VITL - Free Report) and Diageo (DEO - Free Report) .
Freshpet presently sports a Zacks Rank #1 (Strong Buy). FRPT shares have gained 14.6% in the past three months. FRPT has a trailing four-quarter earnings surprise of 132.9%, on average.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and EPS suggests growth of 26.1% and 202.9%, respectively, from the year-ago period’s reported figures.
Vital Farms currently has a Zacks Rank #2 (Buy). VITL shares have dropped 1.9% in the past three months. The company has a trailing four-quarter earnings surprise of 82.5%, on average.
The Zacks Consensus Estimate for Vital Farms’s current financial-year sales and earnings suggests growth of 26.3% and 88.1%, respectively, from the year-ago period’s reported figures.
Diageo currently carries a Zacks Rank #2. DEO shares have risen 4.4% in the past three months.
The Zacks Consensus Estimate for Diageo’s current financial-year earnings suggests growth of 1.2% from the year-ago period's reported figures.
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Coca-Cola Beats Q3 Earnings & Sales Estimates, Revises 2024 View
The Coca-Cola Company (KO - Free Report) has reported third-quarter 2024 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. The company’s earnings per share (EPS) rose year over year while sales declined. The results benefited from continued business momentum, aided by improved pricing across markets. Following the results, KO has revised its view for 2024 and provided its outlook for 2025.
Coca-Cola has reported comparable EPS of 77 cents in the third quarter, up 5% from the year-ago period. Comparable EPS also beat the Zacks Consensus Estimate of 74 cents. Unfavorable currency translations hurt the comparable EPS by 9 percentage points. Comparable currency-neutral earnings per share rose 13% year over year.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenues of $11.85 billion declined 1% year over year but surpassed the Zacks Consensus Estimate of $11.61 billion. Organic revenues rose 9% from the prior-year quarter. Coca-Cola’s top line was hurt by declines across most of its operating segments. An improved price/mix in the quarter was offset by lower concentrate sales and adverse currency rates. In the reported quarter, Coca-Cola gained a global value share in the total number of non-alcoholic ready-to-drink beverages, led by Romania, France and South Africa.
The Zacks Rank #3 (Hold) stock has risen 5.5% in the past three months compared with the industry’s growth of 4.8%.
Image Source: Zacks Investment Research
Detailed Picture of KO’s Q3 Volume & Pricing
In the reported quarter, concentrate sales moved down 2% year over year, whereas the price/mix improved 10%. The price/mix benefited from higher pricing in the markets facing intense inflation, which contributed 4 points to the improvement. Also, pricing actions across the marketplace and a favorable mix contributed to the rest of the increase. In the quarter, concentrate sales were one point behind unit case volume, mainly driven by the timing of concentrate shipments.
Coca-Cola’s total unit case volume fell 1% year over year in the third quarter, driven by declines in China, Mexico and Türkiye.
Our model had predicted year-over-year organic revenue growth of 5.7% for the third quarter, with a 5.1% gain from the price/mix and a 0.6% increase in the concentrate sales volume.
CocaCola Company (The) Price, Consensus and EPS Surprise
CocaCola Company (The) price-consensus-eps-surprise-chart | CocaCola Company (The) Quote
Coming to the cluster-category performance, the unit case volume was flat year over year for sparkling soft drinks and trademark Coca-Cola. These categories benefited from growth in Latin America, North America and the Asia Pacific, offset by a decline in Europe, Middle East and Africa (EMEA). Coca-Cola Zero Sugar advanced 10%, aided by growth in all geographic operating segments. Meanwhile, the sparkling flavors category fell 1% year over year, owing to declines in EMEA and Latin America, offset by growth in North America and the Asia Pacific.
Volumes for juice, value-added dairy and plant-based beverages dipped 3% in the third quarter, led by declines in Minute Maid Pulpy in the Asia Pacific and Mazoe in Africa. This was partly negated by growth in fairlife in the United States.
Unit volumes for the water, sports, coffee and tea category dropped 4% year over year in the third quarter. Coca-Cola witnessed a 6% volume slip in the water category, led by declines across all operating segments. Sports drinks fell 3%, as gains in EMEA were more than offset by declines across other geographic segments. The coffee business dipped 6% due to a soft Costa coffee performance in the U.K. The tea volume rose 7%, backed by growth in the Asia Pacific, Latin America and EMEA.
Peak Into KO’s Segmental Details
Revenues rose 11% year over year for Latin America, 10% for North America and 1% for Global Ventures. However, revenues declined 1% for EMEA and 20% for Bottling Investments. Meanwhile, revenues remained flat year over year for the Asia Pacific segment.
Organic revenues improved 25% year over year in Latin America, 16% in EMEA, 10% each in North America and Bottling Investments, and 5% in the Asia Pacific. However, organic revenues were flat in Global Ventures.
Analyzing Coca-Cola’s Q3 Margins
In dollar terms, the operating income declined 23.2% year over year to $2.5 billion, including a 10-point impact of currency headwinds. Comparable operating income rose 3.8% year over year to $3.7 billion. Comparable currency-neutral operating income advanced 14% on strong organic revenue growth across all segments, offset by currency headwinds.
The operating margin of 21.2% in the third quarter contracted 619 basis points (bps) from 27.4% in the prior-year quarter. The comparable operating margin expanded 104 bps to 30.7%. The comparable currency-neutral operating margin expanded 274 bps to 32.4%.
Our model predicted the third-quarter adjusted operating margin to expand 60 bps year over year to 30.3%, driven by 210-bps growth in the gross margin, offset by a 160-bps increase in the SG&A expense rate.
KO’s Guidance for 2024
Management has updated its view for 2024. It anticipates organic revenue growth of 10% for 2024 compared with the 9-10% rise mentioned earlier. Comparable net revenues are expected to include a 5% currency headwind based on current rates and hedge positions. The guidance also includes a 4-5% negative impact of acquisitions, divestitures and structural changes. The company anticipates an underlying effective tax rate of 18.8% for 2024.
Comparable currency-neutral EPS for 2024 is expected to increase 14-15% year over year compared with the previously mentioned 13-15% rise. The company anticipates comparable EPS to grow 5-6% year over year for 2024.
Comparable EPS growth is expected to include currency headwinds of 9%, and impacts of 1-2% from acquisitions, divestitures and structural changes. The company expects most currency headwinds to result from currency devaluation due to intense inflation. Earlier, it expected currency headwinds of 8-9% to impact comparable EPS.
Management envisions an adjusted free cash flow of $9.2 billion for 2024, including $11.4 billion in cash flow from operations. Capital expenditure is likely to be $2.2 billion.
For fourth-quarter 2024, comparable revenues are expected to include a 4% currency headwind, and a 4-5% negative impact of acquisitions, divestitures and structural changes. Comparable EPS is estimated to include a 10% currency headwind, and a 3-5% negative impact of acquisitions, divestitures and structural changes.
Additionally, the company provided its initial view for 2025. It expects comparable net revenues to include a low-single-digit currency headwind based on the current rates and hedged positions. Meanwhile, comparable EPS is anticipated to include a mid-single-digit currency headwind for 2025.
Stocks to Consider
We have highlighted three better-ranked stocks from the Consumer Staple sector, namely Freshpet (FRPT - Free Report) , Vital Farms (VITL - Free Report) and Diageo (DEO - Free Report) .
Freshpet presently sports a Zacks Rank #1 (Strong Buy). FRPT shares have gained 14.6% in the past three months. FRPT has a trailing four-quarter earnings surprise of 132.9%, on average.
You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and EPS suggests growth of 26.1% and 202.9%, respectively, from the year-ago period’s reported figures.
Vital Farms currently has a Zacks Rank #2 (Buy). VITL shares have dropped 1.9% in the past three months. The company has a trailing four-quarter earnings surprise of 82.5%, on average.
The Zacks Consensus Estimate for Vital Farms’s current financial-year sales and earnings suggests growth of 26.3% and 88.1%, respectively, from the year-ago period’s reported figures.
Diageo currently carries a Zacks Rank #2. DEO shares have risen 4.4% in the past three months.
The Zacks Consensus Estimate for Diageo’s current financial-year earnings suggests growth of 1.2% from the year-ago period's reported figures.